To be a saver-for-life and to be a life-saver

How did you first learn about the importance of saving? If you are like me and many Filipinos, your introduction to saving came in the form of a piggy bank or a Disney-themed cylinder or a bamboo “alkansiya”. We look forward to the change every time we go to the supermarket or the “aguinaldo” we receive on our birthday and Christmas. We get such a high every time we feel the piggy bank getting heavier and making less noise.

This time-honored value of saving remains an anchor for some of us who realize that earning money can mean blood, sweat and tears, especially during challenging moments of our lives. For sure, we have learned about the story of ants and how they save up for rainy days.

Unfortunately, the discipline of saving is also a struggle for those who believe in the importance of making the most out of life’s adventures. The temptation to spend always presents itself in bargains with online sales each month that started only with 11/11 then 12/12, then 1/1, 2/2 and so on. Those who dream of owning a condo unit or driving a car or investing in a farm soon realize that they are nowhere near their #lifegoals.

This pandemic has taught us many lessons. One is the importance of financial security because emergencies such as sickness and unemployment can happen to anyone, anytime—time to heed that nagging voice and save up for the coming rainy days.

Based on the Census and Economic Information Center (CEIC) data, the country’s gross savings rate in March 2021 further dropped to 7.3%, far lower than our neighboring countries, specifically Singapore’s 45.8%, Indonesia’s 35.1%, Thailand’s 33.3%, Hong Kong’s 24.8%, Vietnam’s 24.8%, and Malaysia’s 24.2%.

While a country’s wealth is a major factor, financial literacy and accessibility of financial services for most Filipinos hamper their ability to save and achieve their dreams for the family. This prompted the Bangko Sentral ng Pilipinas (BSP) and local banks to push for more efforts to promote financial inclusion throughout the country, particularly in underserved markets. And it is paying off.

According to BSP’s 2019 “Financial Inclusion Survey”, the unbanked adult population in the Philippines has gone down to 71.4%, an improvement from 77.4% in 2017. Said another way, those with a formal bank account rose from 22.6% to 28.6% or an equivalent increase of 5.1 million newly banked customers.

In its survey, the central bank found that the primary use of these formal bank accounts is for savings. Even more interesting is the fact that the increase was driven by working adults from rural areas belonging to socioeconomic class E — an indicator that financial inclusion is making significant strides in the lower income groups and areas outside of the big cities.

The rise in formal bank account penetration tells us that it has become clearer to more Filipinos that setting aside some savings provides financial stability and helps us become better prepared during uncertain times.

When one gets over the hump of practicing the discipline and habit of saving, the next thing to learn is how to make your savings work even harder so you can get more out of the money you have in the bank.

Build up

This month, the country marks the Depositor Protection and Awareness Week (DPAW) from June 16 to 22. DPAW was created under a presidential proclamation to further strengthen depositor confidence in the country’s banking system to complement the government’s thrust of sustaining economic growth.

BSP recognizes that “savings accounts in banks enable people to deposit money for safekeeping while earning interest simultaneously. Some banks facilitate savings transactions through technological innovation like electronic money wallets (e-money) or mobile financial services.” Another advantage of deposited money—while safeguarded, insured, and can be withdrawn quickly—is it can open up access to other financial services like credit.

Many local banks are offering a wide range of deposit products with various features that would allow customers to grow their money through interest and other benefits. For example, the Bank of the Philippine Islands (BPI) has Build Up deposit products, such as the Pamana Savings and Maxi Saver.

Pamana Savings account holders get free life insurance which can pay out up to three times their account balance of up to a maximum of P2 million. The Maxi Saver gives an additional 0.125 percent bonus interest if a client does not make any withdrawal within a month. Other banks may offer other perks that clients can take advantage of.

There are also foreign currency deposit products. These are ideal for people who regularly receive remittances from their loved ones working abroad. These would also work for businessmen who regularly transact with their suppliers, partners, or clients in US dollars, or to freelancers receiving their pay in foreign currency. With $500 as initial deposit, clients can already sign up for a US Dollar Savings in BPI and grow their money.

For those who can afford to keep their money longer, time deposits offer higher rates than regular savings accounts – the longer the tenor, the higher rate. BPI Family Savings Bank has a 5-year time deposit that earns as much as 2.175%, tax-free. This is perfect for those who are looking to safekeep their money for some future goal such as retirement, home expansion or college tuition.

Other Upside

While many of those who open an account use it for savings, there are other functions that can be unlocked with these kinds of products, too. With a debit card option, clients may enjoy convenient in-store and online payments – here and abroad.

When COVID-19 hit, consumers realized the importance of safe and cybersecure digital banking services and platforms to enable them to purchase essentials and conduct transactions from home.

For example, BPI Online and Mobile app customers benefited from security features like One-Time PIN (OTP) and transaction notification via email or SMS. Account holders could also adjust their controls to block their card, set transaction limits, enable or disable international access, and enable or disable e-commerce when necessary.

Customers can also use BPI’s Mobile Key as a more secure and convenient alternative to OTPs for authenticating bills payments and funds transfers to unenrolled accounts and to other banks. They can complete these transactions using their nominated PIN code or biometrics such as fingerprint or face ID, guaranteeing that the transaction can only be done by them using their registered device.

Digital banking is the ideal vehicle for us to reach our goal of creating a more financially-inclusive nation, especially as smartphone ownership far outpaces the number of bank account holders.

Innovative deposit products that leverage technology can empower Filipinos to become more mindful of their finances while providing them the tools to make their savings work for them today and tomorrow.

There’s another essential advantage to opening a deposit account in a bank. It is insured by the Philippine Deposit Insurance Corporation (PDIC) up to P500,000. So you are assured that you have a safety net up to that amount. You will not get that by keeping your money in a piggy bank or alkansya at home.

Given these opportunities, we understand that the current economic reality means that starting a savings account is much harder for people who have to scrape by every day. But we firmly believe in the resourcefulness of Filipinos and that when there’s a will, there’s a way.

Banks are here to help get you started and show you the right way to genuine financial resiliency. I highly encourage using your time on social media to follow banks’ social media pages where financial education resources are available for free to anyone.

Stay safe and save for the rainy days and, yes, for that home you’ve long dreamed of. From #lifegoals to #lifegoalsachieve, join us to be an ambassador of financial health, be a saver-for-life and a life-saver.

This was published in the Philippine Star on June 18, 2021.